Wednesday, April 22, 2009

For the past two years or so, I've been pretty much obsessed with the equities market. Ever since it collapsed in late 2007, my 401K and IRA lost a portion of its value. I know I'm not alone, but I wanted to know the reasons behind it and how I can spot the signals before future market corrections.

With that in mind, I started to educate myself about the world of equities trading. I took baby steps at first and started with fundamental analysis, but that proved to be useless in a bear market govern by fear. With fundamentals, I can go on and on about what I think a stock price should be because of XYZ reasons, so in essence it's all based on past history and potential future forecast that can of course be manipulated. What I really needed was something more technical and visual, being an artist and all. So my path took me towards technical analysis. It is a study of price action among many other things which I don't have time to get into. All in all, EVERYTHING appears in the charts first. Even before the news. Anyway, back to the point of where we are...

Here's an analysis I did of the weekly chart of the SPY (S&P 500 ETF). I wanted to see what I would've done differently knowing what I know now. As I was drawing on top of it, I notice a lot of signals that should've made me pull out of my IRA and 401K. Live and learn. For now, I'm mostly in a cash position and I trade whenever can or when I spot an opportunity (pre-breakout) I simply can't resist. As for longer term investments, I wouldn't add anything to my retirement stuff until price breaks/holds above a flattened 200 day moving average (Blue line). As you can see we have ways to go.